re: High Earners Age 50 and Older Are About to Lose a Major 401(k) Tax Break

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agreeing upon the threat of imprisonment or death is not really "agreeing."

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And you aren’t forced to live here. Move to the Bolivian Amazon and live off the jungle, you won’t have to pay taxes

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Said worker dies, but never pulls the money out the traditional 401k, thus it isn’t taxed. That money is then passed down to their heirs at a stepped up basis and tax is never paid on the incremental amount between their contribution amount and the new basis amount

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401(k)s get a step up in basis? That is news to me. I was under the impression that it is transferred to a spouse under normal rules or to a non-spouse in a beneficiary IRA and must be liquidated within 10 years, with few exceptions.

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Back to victim shaming

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leftist drivel

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The big grab there is that the contributions after making 145k will be taxed at >= 22%.

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Its only make-up contributions which means any dollar contributed after $23K pretax will be taxed if you make $145K a year.

The real irony is most people 50 or older that earn $145K a year aren't putting $23K a year in their 401(k) unless their spouse is also a high earner.

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They actually weren’t in this case, which is why they made this rule.

Older workers were putting in pre tax money. Said worker dies, but never pulls the money out the traditional 401k, thus it isn’t taxed. That money is then passed down to their heirs at a stepped up basis and tax is never paid on the incremental amount between their contribution amount and the new basis amount

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No, this is just flat out wrong. The government was only ever going to get income tax on distributions from pre-tax IRAs or 401(k)s. Basis and step-up have nothing to do with this since there are no capital gains taxes involved. The Government collects income tax on all amounts distributed including what was put in and all of the growth of the assets.

When someone dies and passes on these accounts to heirs the only difference is the potential tax rate of the original account owner vs the heir.

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I’m just talking from a philosophical perspective like you wanted to

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No, you aren't. You are creating a strawman fallacy.

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Instead of trying to change the argument, address the issue. If someone points a gun at you and says "give me your money," and then you do it. You just "agreed" to give them your money. This could have been avoided if the person just didn't go to the area where the thief was. Since you "agreed" and you could have "chosen" to not be in that place, it is not theft. This is your argument. Do you stand by it?

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You’re a fricking moron. You created a fallacy in response to your agreeance to a social contract.

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No, this is just flat out wrong. The government was only ever going to get income tax on distributions from pre-tax IRAs or 401(k)s. Basis and step-up have nothing to do with this since there are no capital gains taxes involved. The Government collects income tax on all amounts distributed including what was put in and all of the growth of the assets.

When someone dies and passes on these accounts to heirs the only difference is the potential tax rate of the original account owner vs the heir.

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Correct, as I stated before. You would think a "high-level" tax guy would know this.

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You would think a "high-level" tax guy would know this.

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Not my area of practice and hadn’t had my coffee this morning.

Mingo regrets the error and will never edit

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Like I can somewhat understand giving new businesses/industries some breaks in order to spur innovation but there's something that just sticks in my craw about giving gigantic tax breaks to corporations that make hundreds of billions a year. Or heavily regulated utilities spreading increased costs to all of their customers after a new datacenter that none of the local community asked for comes online.

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Do y'all not understand that local and state governments have to compete against other local and state governments to get these mega companies to inject BILLIONS of dollars into your economy?

Just look at the growth around I-10 and Hwy 30 over the past 20 years as a prime example of how ITEP helps your economy.